Top 5 Creative Finance Mistakes
That’ll Hit Your Wallet (and Reputation) Fast
Creative finance has been having a moment. And it's growing.
Subject-to. Seller finance. Wraps. Lease options. Everyone’s out here “closing with no money down” and calling it a win, claiming they’re “helping” the sellers.
I got started in transaction management, deal structuring, and underwriting as a consultant in 2022—and the top 5 mistakes made then are the same ones I still see now.
Here’s the reality:
Creative finance done wrong isn’t just risky—it’s reckless.
You’re not just gambling your own wallet and reputation. You’re risking the seller’s future—usually someone already in a vulnerable position, you're putting the agents, title company, and other professionals in jeopardy. All because of a half-baked idea you saw on youtube to "buy with no money down" and become an investor.
Instead of trying to hit the easy button, study these simple, most common mistakes.
And in too many cases, what you're doing? Not even legal.
If you care about sustainable investing, reputational integrity, and not being the reason creative finance gets regulated to death or the villian in someone’s creative finance horror story—you need to know these:
1. Horrible Deal Structuring
Just because it "pencils" doesn’t mean it’s protective. Most creative deals I review are lopsided, short-sighted, and structured in a way that leaves someone exposed. Get educated. Learn multiple exit strategies. Understand your downside. No one cares what it cash flows if the foundation is cracked. Selling something as a wrap or co-living property because it doesn’t cashflow another way, doesn’t make it so. The price needs to adjust or the deal needs to die if you’re not creativing safe and secure structures.
2. No Insurance In Place
You’d be shocked how many people close without proper insurance binding. A lapse in insurance is one of the top-3 reasons due on sale gets called. Lenders have call rights. Sellers have liabilities. And you? You’re on the hook. Protect the asset like you own it—because you do. Don’t wait until after closing to take care of it, chances are you’ll forget with property stabilization and the next acquisition.
3. Missing or Incomplete Paperwork
This one’s often overlooked… until the mortgage gets called due. Wraps, novations, land trusts, seller finance—they all require tight paperwork and clear terms. Sloppy docs = expensive cleanup. There are at least five critical pieces of paper, but tons of conversations and ways to ensure they’re properly communicated. Leading to the next mistake…
4. Skipping Disclosures (or Doing Them With the Wrong Person)
You can’t just wave a disclaimer and call it transparency. Buyer and seller disclosures matter—and so does who you give them to. Expert tip: Don’t close with the disclosures a wholesaler signed to lock up the deal. The buyer is the one in the deal long term and disclosures are between the seller and buyer not some random temporary third-party.
5. Offering a Deed-in-Lieu Too Early
A deed-in-lieu sounds like an elegant fallback. It is actually just a toothless objection-handling tactic, and it’s just that. A tactic. It is not legally enforceable and it is manipulative to offer to subdue the very real risks of selling a property subject-to the existing mortgage. Most investors don’t even understand when it applies (hint: AFTER a default occurs). If you’re tossing it in as a catch-all, you’re out of your depth.
Creative finance can be powerful. But without real diligence, it’s chaos at best, or fraud at worst.
The solution? Learn to structure creative deals. Know how to spot a broken deal before it breaks you (and all parties involved)
Want to learn more? Have questions? You can [book a call here].
Let’s stop normalizing bad habits and start building better deals—together.
